What To Do When Someone Dies: Bank Accounts

January 10th, 2011

In the event of the death of a loved one or friend, there is so much more to deal with than just the emotions and pain of the passing. The harsh realities of modern life mean that anyone who leaves the world almost always also leaves behind a number of accounts, financial documents, and paperwork that has to be sorted through.

Although funeral pre-plans, wills, and power of attorney orders can go a long way in putting your affairs in order before you die, most people don’t have the luxury of preparing for their own death. This series of articles should help you to determine how and when to tie the loose ends associated with money, real estate, and other accounts following the death of a relative.

Who Can Access the Bank Accounts?

Most Americans have a combination of banking accounts—often at several different financial institutions, and many of which can be international or out-of-state. Unless you are listed on the account as a co-signer or have power of attorney (which gives you the legal right to access almost any type of account), you won’t be able to just go in and stop payments or make withdrawals.

Joint Account: In the event that you have a joint bank with the deceased, all control over the account goes to the remaining party, and you can continue to make payments, deposits, and changes the same way you did while the deceased was still alive. However, in order to remove the deceased from the account, you must show proof of death through a valid death certificate. At that time, the account and all materials associated with it (debit cards, paper statements, the personal information kept on record) defaults to the remaining account holder.

Traditional Bank Account: In a traditional bank account, a single individual has sole control over the money and how it is used. These can be checking accounts or savings accounts. According to law, the first consideration is that the money goes to the individual(s) indicated in the will. If no will has been made, the money in an individual bank account goes to the closest living relative or next of kin (usually a spouse, parent,
or child). In order to access the account, you must have not only a copy of the death certificate, but also proof of your own relationship to the deceased through a birth certificate, a copy of the will, or an executor’s testament.
Trust Account: In a trust account, considerations have already been made for the settlement of the money following death. Usually set up as part of a larger will or estate planning process, the trust states who will be the beneficiary of the account’s contents following the death of the primary holder. This beneficiary may be a person, a group of people, or even an organization. A proof of death (death certificate) is all that is required to access the funds, as long as it is in keeping with the individual trust stipulations.

Safe Deposit Boxes: Safe deposit boxes operate in much the same way as traditional bank accounts, in that they cannot be accessed unless you have proof of death and proof that you are the next of kin or beneficiary of the account. In some states, individuals are required to fill out a rental agreement before they can get a safety deposit box, and they will be asked to provide a list of relatives who may access the box in the event of their death. In these cases, you must comply with the rental agreement.

What Are My First Steps?

In most cases, your attorney, the Executor of the Will, or the Personal Representative can help you navigate the tricky financial waters of bank accounts following the death of a loved one. However, there are a few things you can do to prepare the paperwork on your end of things.

1) Freeze the account, if necessary. Only the Executor of the Will can legally accomplish this, but if there is any question as to who should or should not be allowed to access the money, or if there are automatic debits that need to be stopped, freezing the account might be your best first step.

2) Get several copies of the death certificate. These can typically be ordered through the funeral home or directly from your county or state Department of Health. There will be a charge associated with ordering each one, but many financial institutions require an official copy, so it’s a good idea to have plenty on hand.

3) Contact each bank for more information. Chances are, you aren’t going to be able to walk in and talk to a teller to get all the paperwork filed and processed. You will be asked to make a meeting with a financial advisor familiar with the process who can direct your next steps. Call ahead and
make the appointments, being sure to ask what proof of identity you will be asked to provide.

4) Go over financial statements in the home of the deceased to see what you might be missing. Many times, loved ones discover that there are additional bank accounts or safe deposits that need to be closed and/or the funds dispersed. Although shuffling through decades of paperwork might not be fun, you might discover an older or newer account that you didn’t know about before. If you are unsure if there are additional bank accounts in the deceased’s name, you may be able to contact your state comptroller or unclaimed property office for more information.

5) Prepare to comply with the will or estate Executor. If the deceased left behind a legal will, it will indicate an individual or group of individuals (the Executor or Personal Representative) responsible for distributing the assets in accordance with the law. If there is no will, then the state will most likely assign someone to be in charge. No matter what you might have been told about the bank accounts or what seems fair to you, you will only be able to act under their discretion and in the proper legal channels.

Death and funeral planning is never easy, and the complications that come with money and personal assets can make things even more difficult. By preparing ahead through funeral pre-plans, estate planning, and will drafting, you can facilitate the process for your loved ones. And no matter how
well-planned things are, it can still take some time for all the paperwork to go through and the money disbursed through the appropriate channels.

Our next post in this series will be released on Friday January 14, 2011 and will be about what to do when someone dies and how to handle their debts and bills.

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